BBC, Under Criticism, Struggles to Tighten Its Belt

The BBC, the world’s biggest and oldest public broadcasting company, has effectively sentenced itself to a 16 percent budget cut through 2017.

SARAH LYALL and ERIC PFANNER

DAVID CAMERON, the British prime minister, was in Brussels meeting the press last October when he took a few moments to make fun of the British Broadcasting Corporation.

“Good to see that costs are being controlled everywhere,” Mr. Cameron said as he directed a mocking glance at three BBC correspondents, each from a different BBC program, covering his news conference.

The implication: Considering that the BBC has agreed to freeze most of its public funding for six years, effectively sentencing itself to a 16 percent budget cut through 2017, it surely could have looked harder at its staffing needs for the event.

“We’re all in this together,” Mr. Cameron said sarcastically, reciting his government’s favorite austerity slogan, and then added, “including, deliciously, the BBC.”

Why would the British premier celebrate the financial woes of the BBC? The corporation is the biggest, oldest and most revered public broadcasting company in the world, a centerpiece of the British brand, as essential to Britain’s view of itself as the National Health Service or the royal family.

The BBC’s news broadcasts, whether on the radio or on television, exude authority and command respect around the globe. The corporation has also made extraordinary cultural contributions to Britain over the decades, through nurturing talent, sponsoring major musical events and broadcasting television shows like “I, Claudius,” “Monty Python’s Flying Circus” and “Fawlty Towers.” Britons call it, affectionately, the Beeb, and sometimes “Auntie,” for its traditional role as the last word on everything.

But despite all that, or perhaps because of it, the BBC seems at times to be an all-purpose whipping boy, an easy target for casual joking and at times naked derision from the country’s political establishment.

As Mr. Cameron’s Conservative-led coalition government embarks on a grueling austerity program, it has accused the BBC of “extraordinary and outrageous waste.” Media companies — especially those of the Rupert Murdoch media empire, the BBC’s chief competitor — have been quick to join the critical chorus.

Much of the criticism has to do with the license fee of £145.50 (about $240) that is levied annually on every British household with a television set. The fee brings in £3.6 billion a year, about 80 percent of the BBC’s total income.

The mandatory charge makes Britons feel, rightly, that they own the BBC, and emboldens them to complain loudly and often — as thousands did recently about a storyline in the soap opera “EastEnders.” In the show, a character whose baby dies of sudden infant death syndrome secretly swaps the body with her neighbor’s live baby. The writers rewrote the script so that she finally gives the baby back.

Just as Republicans in the United States have complained that National Public Radio has a left-wing bias, so do conservatives in Britain complain about the BBC’s political leanings. (A threat to remove NPR’s federal funding has remained only that so far.)

Members of Parliament are outraged at BBC executives’ high salaries, like the 2010 compensation package of £838,000, or about $1.4 million, for the director general, Mark Thompson; that total is set to drop to £619,000 this year. Its employees — it had more than 21,300 at the end of 2010 — are worried for their jobs, angry about a plan to relocate many of them from London to a suburb of Manchester, and unhappy about cuts in their pension plans.

The BBC’s many detractors, led by Mr. Murdoch’s corporation, say the licensing fee has allowed it “to get too big, too smug, too unanswerable,” as The Sun, a tabloid owned by Mr. Murdoch, declared in an editorial last year.

The BBC is not permitted to accept advertising for its broadcasting activities or Web sites within Britain, but it does accept ads and generates revenue through some of its international arms. Rivals complain that it behaves increasingly like a profit-making company, despite its public subsidy.

THE licensing fee is an anachronism, put in place in 1922, when the BBC was founded as a monopoly. Such was its reverence for the seriousness of its own mission, to “inform, educate and entertain,” that its news anchors habitually wore dinner jackets during radio broadcasts. It got its first television competitor, ITV, in the 1950s.

Today’s media landscape, with scores of television and radio channels available via satellite, cable or over the air, is unrecognizable from the one envisioned all those years ago. As those channels fight for audiences and advertising, the BBC’s guaranteed income is, more than ever, a source of envy.

“If you look at the dynamic marketplace that exists in this country, and someone came along and said, ‘This is a market that needs three and a half billion pounds’ worth of public intervention,’ they would be laughed out of court,” said Michael Grade, a former chairman of both the BBC and of ITV, the biggest commercial TV company in Britain. Like many Britons, both friends and foes of the BBC, Mr. Grade believes that the corporation has been allowed to grow too big and too unwieldy, offering too much to too many people.

Every week, more than 97 percent of the British population watches, reads or listens to something produced by the BBC, which operates 10 TV channels and 16 radio stations domestically. Through its World Service radio network, it has a weekly global audience of 180 million.

“The BBC is a bit like religion,” Mr. Grade said. “It’s an article of faith; you either believe in it, or you don’t. I happen to believe in it. But it can’t do everything that it does now.”

That is the consensus, even within the BBC, which is now going through the painful process of deciding how to find £1.3 billion (about $2.1 billion) of cuts in the four-year spending plan ending in 2017 — from back-office expenses, from the internationally celebrated World Service, from its online operations, from its news and entertainment divisions and, possibly, even from coverage of quintessentially British television events like Wimbledon.

But some things, like the royal wedding this Friday, are beyond austerity. The corporation, which will provide a video feed from Westminster Abbey to broadcasters around the world, plans to devote 550 employees to the event.

The license-fee freeze was announced last fall after a series of tough meetings between the BBC and the government, which had threatened much deeper cuts. As well as the freeze, which comes after years of increases, the BBC will take on hundreds of millions of pounds in new responsibilities, including paying for the first time for the World Service, whose £237 million annual budget comes from the British Foreign Office.

Because of Foreign Office cuts to current World Service funding, the BBC announced last year that it would reduce the Service’s work force by about a quarter, losing 650 employees. It also announced plans to eliminate programming in Russian, Mandarin Chinese and other languages.

Outside the World Service, the BBC has already been on a strict diet. In response to complaints that the corporation is larded with highly paid managers, it has frozen some salaries and, it says, reduced its senior management payroll by 18 percent since August 2009.

That’s just the beginning. The BBC is “going to have go through a fairly fundamental rethink,” said Steve Barnett, professor of communications at the University of Westminster in London.

David Elstein, a former BBC executive and a persistent critic of the license fee model, put it more starkly. “What we are looking at is the biggest financial crisis in the BBC’s history,” he said in an e-mail interview.

But compared with public broadcasters elsewhere, the BBC has problems that might seem almost quaint. With government finances under pressure nearly everywhere, funds for public broadcasters, from license fees and other sources, have been cut sharply in countries like Spain, Poland and Lithuania.

“It’s a question of looking at the glass half-empty or the glass half-full,” said Claire Enders, founder of Enders Analysis, a media research firm. She chose the half-full option. She predicted that with the number of households increasing over time, thus adding to license fee revenue, the BBC would find the cuts relatively easy to absorb.

That is a view that Mark Thompson, the BBC’s scrappy, self-assured director general, was eager to promote in a recent interview in one of the BBC’s buildings in its West London complex. (It is selling much of its property there to save money and is moving many operations to central London.)

“It’s a satisfactory settlement,” he said of the license-fee freeze. “I don’t think it’s an easy settlement, but it’s a settlement we can get to work.”

To that end, he has been presiding over the euphemistically titled “Delivering Quality First” program, in which various committees meet to gather ideas on where the cuts can come from. (Another constant complaint about the BBC is how bureaucratic it is — filled, employees like to joke, with “chief assistants to the assistant chief.”)

Caroline Thomson, the corporation’s chief operating officer, said that it would reduce management levels so that there would be no more than seven layers of management between “the director general and the most junior staff.” There are now as many as nine.

Signaling another possible cut, the BBC’s director of news said recently that sometimes it was a waste of money to send big names to cover major news stories abroad, a longtime corporation practice. Mr. Thompson, meanwhile, recently unveiled 21 general areas for possible savings, like eliminating middle-of-the-night television service, reducing the number of radio stations and offering fewer political programs.

Mr. Thompson laughed off the corporation’s rivalry with the News Corporation, the Murdoch media empire. Nor, he said, does he have anything against James Murdoch, Rupert’s son, who is the chairman and chief executive of the News Corporation’s European and Asian divisions and who went off on the BBC in a now-infamous tirade in a speech to British media executives in 2009.

In the speech, Mr. Murdoch accused the corporation of “mounting a land-grab, pure and simple,” and stifling competition. “The scale and scope of its current activities and future ambitions is chilling,” he said.

Through the four papers in its British newspaper division, the News Corporation controls one-third of the newspaper market in Britain. It also owns 39 percent of BSkyB, the biggest pay-television company in the country, and is negotiating to buy the rest, in a deal that has been effectively cleared by the government over the objections of other media organizations.

Mr. Thompson said that the BSkyB deal would, in fact, level the playing field. “Now you’ve got a situation that’s rather more balanced, and while people will still have question marks about the scale and scope of the BBC, the scale and scope of NewsCorp and BSkyB is very much part of the conversation as well.”

Yes, the BBC is big, Mr. Thompson acknowledged, but size has its advantages. Rather than tiptoeing into the digital future and hastening its own irrelevance, the BBC has moved aggressively to embrace new technology.

The BBC’s sprawling Internet presence includes hundreds of Web sites linked to its news and entertainment programs, among other things. In 2007, it introduced iPlayer, a wildly successful Internet service that lets viewers watch — free of charge — shows they missed on television. In January, it was used to watch 162 million programs. The BBC plans to expand it to other countries, charging a fee this time for the right to see BBC shows like “Doctor Who” or “Top Gear.”

THE BBC has also taken the lead in developing a planned Internet TV service called YouView that would bundle together Britain’s main over-the-air channels and other programming like on-demand movies, and deliver it all via a special box attached to people’s televisions. Even BSkyB, after unsuccessfully lobbying regulators to block YouView, recently expressed interest in it.

“I think some of the enemies of public-service broadcasting are so noisy because they expected a natural obsolescence, some kind of retreat, and that hasn’t happened,” Mr. Thompson said.

Peter Bazalgette, a television producer and media analyst, said that much of the political and commercial criticism was unpersuasive to the BBC’s still-loyal audiences.

He went on: “In the Internet age, in a Tower of Babel of rumor and paranoia and the place where people think that Elvis is alive, Paul McCartney is dead and the Jews blew up the Twin Towers, there is more of an argument than ever for an independent, state-funded, trusted and reliable source of news and information. If you drastically change it, you’re chucking away a great deal of what makes it great.”

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